Everybody Loves Your Money

Okay, I need to come clean.  I want a star next to my blog link on http://www.pfblogs.org.

But, now that I’ve disclosed that there is something in this for me, I do need to tell you a little story about reading PF blogs.  You see, I’ve been a little irrational about how I look for blogs to read.  I tend to wander aimlessly around the PF world.  (At least I used to).  You could find me lurking on the PhatInvestor site, watching for updated blogs and I’ve even tried my hand at using a feedreader.  For some reason, that’s never really warmed me up.

Then, along comes pfblogs.org.  (We all know that isn’t quite accurate.  Actually, along came pfblogs.xxx and then came pfblogs.org.)  Anyway, it turns out that http://www.pfblogs.org is the ONLY way to keep up on PF blog sites.  They aggregate a TON and the interface is very nice.  So nice, in fact, that they even put a little star next to some of the blogs………

Well, I suppose it had to happen sooner or later. My daughter has started spending money. Why is this such a significant event at our house? She’s only 2 and a half years old. Let me explain.

We have been letting her use the computer a little bit. We’ve got one of those “notebook mice” (which basically means it’s a miniature version of a standard mouse), which she is getting very good at using. It’s a goal of mine to have her learn to use the computer proficiently. Both applications and the operating system. I don’t want her to grow up not understanding how computers work because I know it’s going to be such an integral part of her life. It doesn’t hurt that I’m a geek too.

I created her a website that has pictures of each of the different sites that she likes to play at (Disney, Charlie and Lola, Little Einsteins, Dora etc). She knows how to move the mouse around and click on the picture to go to that site. Now, normally we don’t let her do this by herself. Yesterday, my wife was doing some laundry and ran in to the laundry room to switch the clothes from the washer to the dryer. By the time she got back to the kitchen/living room, she noticed that an Amazon page had just popped up with her order confirmation on it. What????? Somehow our daughter had managed to bring up Amazon.com (I’m guessing she must have opened up the history or something) and clicked on a button. My wife had turned on “one click ordering” some time ago and Bam. We were the new owners of “The Best of the Electric Company”. You may recall that show from many years ago. I believe it was on public television. I can remember watching it a few times and can remember enough to know that I don’t want the “Best of” series.

My wife called Amazon right after it happened and was told that the order was already in the process of going through shipping. What??? Already? We were told that we need to write “refused” on the box and it would be returned for full credit, including shipping. I guess we’ll see how that goes. My wife had the Amazon customer service rep turn off one click ordering so that this won’t happen again. Incidentally, did you know that “The Best of the Electric Company” costs about $40 shipped?  (Can you believe she didn’t choose “free shipping”?)

Okay.  A couple things to note.  Sorry if you aren’t using IE.  If you aren’t, you probably can’t see the video player below.

If you are easily offended, don’t watch the video.  Don’t get me wrong.  This video doesn’t have a bunch of people jumping around with no clothes on or anything, but it does have one word in it that might be offensive and a bit of the subject matter is just a touch offensive.  Consider yourself warned.

If I had a nickel for every time someone snubbed their nose at me for my saving habits I could probably retire now. For some reason people like to offer their point of view in small ways. If you are a saver, you’ve heard them too:

“You don’t have caller ID? It’s only $5.95 a month. Dude. Don’t be so cheap”

“What are you saving for?”

“You need to live a little”

“Don’t be such a tightwad”

“You shouldn’t deprive yourself”

It’s really unfortunate that being a “saver” also earns the brand of cheapskate. And why is it a negative trait if you choose not to be a victim of the billions of $$ spent each year on marketing that tries to convince you that what they have, YOU NEED. Even more ironic to me, is who is doing the “labeling”. Most people that offer their comments aren’t so good with money. Some are absolutely terrible. You know what? They aren’t very happy either. They tend to have far more tension in their houses than we do in ours. It’s really funny if you think about it. Many of these people claim that we spend too much time focusing on our money. We really don’t. I spend time looking at our investments/savings/expenses etc because I enjoy it. What’s ironic to me is that I believe they spend just as much time focusing on their money, but in a completely different way. While we look at the money we have saved, they look at the money they have spent in the form of credit card bills, empty checking accounts, interest charges, and figuring out how to pay their bills when they come due. That’s attention on finances that I’d care to avoid.

It’s really all relevant. When I look at how much money we spend each month, once in awhile I think, “Yikes. We spent a fortune on frivelous things this month. My PF blogger peers would think I’m crazy”. A couple other times, I’ve found myself wondering why so many of our friends think we don’t spend enough. It’s a great example of why you can’t base your life on other people’s input. All of this is a personal choice. When others offer their input, it’s really just them putting their nose where it doesn’t belong. It’s just one more way that keeping up with the Jones’ can creep in to your lives if you aren’t careful.

I just watched the second Oprah “Debt Diet” show.  I continue to be struck with how these folks are in denial.  They have all this top quality help and they still aren’t taking it very seriously.  They are acting like children who don’t like the adult telling them what to do.  I don’t think they’ve truly come to terms with the mess that they are in.

I am so happy that Oprah is doing this.  Statistically, the light bulb is going to go off in some percentage of her audience’s heads.  Just like people who browse these personal finance blogs and decide to make a change for the better, Oprah will also have this effect.  (And the sheer mass of viewers make her show far more of an impact than these blogs).

My wife and I sat here together and watched the show this evening.  Earlier this week, I used the online Tivo scheduling just to be sure we didn’t miss the show.  (First time I’ve ever Tivo’d Oprah).  I wish the show was 3 hours long.  It’s fascinating to me to watch these families.  When I see them, I see similiarities to so many people I know.  I know that I don’t have the experience that these “experts” that are on Oprah do, but I do know that I could generate a plan like this for some of my friends to help get them straightened out, but unfortunately, our society doesn’t talk about money openly.  I can’t just walk over to my neighbors and say, “Hey, based on our situations, I think I might know a bit more about how to get you financially secure than you do, and I’m here to help.”  I’d probably risk getting popped in the mouth.  So, I will sit here silently and just hope that they happen to catch the Oprah show, or some other experience causes them to look within themselves and realize that they are their own worst financial enemy.

I still think back to the 20 year old kid that came to me and asked me for some financial advice awhile back.  He just soaked up what I had to tell him.  He was hungry for some of the most general financial information because he had never had an opportunity to learn it from his parents or his schools.  Simple things like compound interest, the rule of 72, dollar cost averaging, spend less than you make, pay yourself first, and never carry a credit card balance. 

All these material things that we continue to amass just saddle us and take away our options in life both today and tomorrow.  The 22″ “bling bling” wheels for your car that cost $4000 aren’t going to take care of you when you are old and sick.  The $2000 car stereo system isn’t going to change your Depends diaper when you are 90.  The 5 vacations you take each year aren’t going to pay for your housing when you are too old to make a living.  The $3000 big screen TV isn’t going to feed you when you are 80 and hungry.  $250 sun glasses?  They’re just going to break.  Do $250 sunglasses offer you 10 times the benefits of a $25 pair?  Are they 10 times easier to find when you lose them?  Are they 10 times less likely to break when you sit your big butt on them in the car?

Okay.  I’ll stop.

Today was a pretty ordinary day. I worked in my home office all day and was pretty productive.  Of course I spent a fair amount of time on the phone, but it was after work that my day really became something special.  Why?  Well, because I went to the dump!

As bizarre as that sounds, let me elaborate.  If you recall, the furniture man stole $1500 from me last weekend, oh okay, he didn’t steal it.  I gave it to him.  You’d be amazed how much cardboard is used to box up furniture.  I know I was.  I ended up with a truck load of cardboard.

So, off to the big recycle bin at the dump.  What made it fun was I took my 2.5 year old daughter with me.  I have never seen anyone so excited to go to the dump.  As soon as I asked her, she jumped out of her chair and ran towards the door.  She doesn’t get to ride in Daddy’s truck very often so when she gets the chance to, she doesn’t turn it down.  She sat in the front seat and was smiling ear to ear the whole way.  We sang songs together all the way there and back and talked about everything we saw, including a train.  It was a great time.  I asked her if she wanted to stop and get a sundae from McDonalds on the way home.  “Yes, Daddy.  Let’s have a sundae”.  She was excited to hold the bag with the sundaes in it all the way home.  She also decided that she wanted to tell Mommy what we got when we got home.  We walked in the door and she said, “Mommy.  We have a surprise for you.  It’s a treat”.

So, like I said.  It was a great day and one of those times where you feel very grateful for the life that you have.  It was an outstanding example of why it’s so important to live for the day as much as you live for the future.

This is what it’s like trying to get people to agree in my big company:

I continue to be amazed at how our home values keep increasing in our neighborhood.  Prices are going up so much, that it almost makes me wonder when they’ll come back down.  At some point, with interest rates going up, and prices going up, there won’t be any buyers that can afford to buy these houses.

When I moved in to our house 3 years ago, it cost me $280k.  Granted, that was a good price at the time because I bought it from someone that hadn’t listed it yet and had some leverage to get the price down.  But, get this.  A house just went up for sale in our neighborhood for $435K.  This house is smaller and not as updated as our house.  Even if it ends up selling for $400, that’s still a $40K per year appreciation.  Surely this won’t last.

So, what does this mean for me?  Not much really.  Rather than use this equity to buy more crap, we are actually accelerating the payments on our mortgage.  So, if the prices do come down some, I just won’t be quite as well off.  No sweat.  I’ve got many years to see this house appreciate.  My goal is to pay this house off in the next 15 years.  It probably doesn’t sound very aggressive, but I have a 30 year loan on our house.  Cutting that in half works for me.

I really hope that my neighbors aren’t all spending this new equity, although I know that some of them are.  I hope they can afford to live here for the long term because I like them!

Well, the net worth took a hit yesterday.  My wife and I decided to go look for some night stands for our bedroom.  We have been using some homemade night stands for about 6 years and before that, we didn’t have any.  I had promised my wife that we could use some of my annual bonus to pick up a couple pieces of furniture to add to our rather small collection of purchased furniture.  Don’t get me wrong.  We have furniture, but some of it was given to us over the years.  If it was up to me, we would have used this “free” stuff forever, but I’m not the only one to consider, and my wife has been extremely patient with my frugal approach to furniture.

So, off to the humungous “locally owned” furniture stores.  This place is HUGE.  It has acres and acres of furniture and is in a small town not too far from where we live.  As we looked around, we quickly realized that we were at the point that it was time to move up from many different mismatched pieces of furniture, to a set of matching furniture for our master bedroom.  No, we didn’t have to, but we decided it was time.

So, we purchased a sleigh bed frame, dresser, mirror and two nightstands.  They all look very nice and it was pretty reasonable to get everything for $1500 including tax.  Most of the bedroom sets there would have set us back between $3000 to $5000, so we feel like we got a relatively good deal.

Because of this purchase, our net worth is taking a bit of a hit.  We have never counted any items inside our house towards our net worth because our preference is to be extra conservative on our assets.  I’m sure we could increase our net worth by about $10k or so if we counted all these kinds of things, but I’d rather not even consider them in the formula.  So, our savings is going down by $1500.  That’s about half of the annual bonus, but we also got over $3k in taxes back.  All of this was somewhat unanticipated so it seemed like the right time to use a little of it to upgrade our furniture.

I’d be lying if I didn’t say I had a tiny bit of buyers remorse, but my wife is happy and we needed it, so the remorse has been kept to a minimum.  (I don’t think I’m capable of not thinking about it at least a few times when the total was over a few hundred dollars)

I was excited to see JLP’s post (AllThingsFinancial) on what Oprah is doing with her friday shows. She calls it the Debt Diet. She is profiling families who are in debt and in need of help. You can view each of the families profiles on her website:

The Bradleys:

http://www2.oprah.com/money/debtdiet/family

The Egglestons:

http://www2.oprah.com/money/debtdiet/family

The Widlunds:

http://www2.oprah.com/money/debtdiet/family

My hope is that this attention to a significant problem in our country will inspire others to start taking control. One thing about all of the families was how much the financial problems impacted their marriages. I’ve seen this in friends before. The pressures of bad financial management take over the family and just tear it apart. I hope these families can turn the corner. I’m struck by how ignorant they are about managing their money. It’s almost like an addiction, and seems to be one person in the family that brings the rest down.

Oprah has also brought in a few familiar faces to help these families. David Bach, Jean Chatzky, and Glinda Bridgforth. Each of them will work with one family to try and help them overcome the spending and execute their plans.

Look for these shows every Friday on Oprah. (I guess I might have to watch Oprah once in awhile now, but please don’t tell my friends. You just can’t get any respect at the poker table when everyone knows you are a guy who watches Oprah)